Starting new business

[Aaron Albertson]

I am new to real estate investment and am looking to see what type of business is best to start. My primary focus will be on rental properties. I am looking at applying for an EIN and am not sure what type of business would be best to apply for like LLC, sole proprietorship, or others. If someone could give me some insight to what would be best that would be extremely helpful.

[Scott Smith]

I address this issue in podcast #109. You can have all of the benefits of Trevor's viewpoint without assuming all of the risk.

An LLC is litigation protection from suits not covered by insurance (any alleged intentional fraud, gross negligence, health code violation, etc.)

You want an LLC to hold the assets separate from yourself or the operations of the company. The best structure is a Series LLC with anonymity trusts so that you compartmentalize the assets if there is a litigation while hiding your ownership and the company ownership of the underlying asset. People don't sue you if they don't think you have anything worth taking, and if they do anyway then the Series limits their liability to a much smaller amount.

Seriously though, if you're investing $20+ into a single property (much less 10) why not pay a one time fee of a couple thousand to get the maximum protections, that costs nothing to scale, and without any year over year expenditures.